1. Introduction and Scope
A limited liability company is defined under Article 573 of the Turkish Commercial Code (TCC) No. 6102. According to this provision, a limited liability company is a corporate entity established by one or more natural or legal persons under a trade name for any lawful economic purpose, where shareholders are generally only liable to the company for their committed capital contributions and the company holds legal personality.
Furthermore, pursuant to Article 574 of the TCC, a limited liability company can have up to fifty shareholders. Each shareholder possesses rights categorized under three main headings: financial rights (property rights), management rights, and protective rights. This article focuses on the legal basis, nature, and consequences of the violation of the “right to access and review information,” a protective right granted to shareholders in limited liability companies, along with available remedies. (1)
To emphasize the importance of the subject: A shareholder, having invested capital and sometimes labor into the company with the expectation of profit, naturally seeks information about the company’s status. Hindering access to such information and documents may harm the rights and interests of shareholders in many cases. The right to access and review information is essential for a shareholder to protect themselves from malicious actions and transactions by other shareholders.
Moreover, the right to access and review information serves as a prerequisite for several key shareholder activities, such as claiming dividends, expressing opinions and voting at general meetings, approving or disapproving the company manager, and determining the actual value of their shares. In other words, a shareholder who cannot exercise this right effectively will also be unable to fully utilize their other shareholder rights tied to their partnership.
2. Legal Basis and Nature of The Right to Access and Review Information in a Limited Liability Company
Article 614 of the TCC, titled “Right to Access and Review Information,” is as follows:
1. Every shareholder may request the managers to provide information about all company affairs and accounts and may conduct a review on specific matters.
2. If there is a risk that the obtained information may be used to the detriment of the company, managers may restrict access to information and reviews to the necessary extent. In such cases, the shareholder may appeal to the general assembly.
3. If the general assembly unjustly prevents access to information and reviews, the shareholder may apply to the court, which shall make a final decision on the matter.
Each shareholder may direct their request for access to and review of information to the manager or the board of managers of the limited liability company. While the law does not impose a formal requirement, making such requests in writing is advisable for proof, particularly in case of rejection and potential legal proceedings.
Additionally, the request for information and review should not be abstract or overly general. It must clearly specify the matters for which information is sought. For instance, a request stating, “I request information about the company’s status,” would not be legally appropriate. Furthermore, addressing such an abstract request would not be feasible for the company’s manager. Therefore, concrete requests, such as asking for commercial books and records, profit and loss statements, or lists of fixed assets for specific periods, are more suitable.
The manager of the limited liability company must respond to requests for information and review within a reasonable time. Although no statutory time limit is specified, if a shareholder does not receive a response within an appropriate time for the situation, they may consider their request denied and proceed with legal actions accordingly.
3. Limitations on the Right to Access and Review Information
According to Article 614(2) of the TCC: “If there is a risk that the shareholder may use the obtained information to the detriment of the company, managers may restrict access to information and reviews to the necessary extent.”
Although the law mentions the limitation on a shareholder’s access to information as a measure to prevent harm to the company, it does not clearly define or specify how such harm might occur, leaving the matter open to interpretation.
Key considerations include the following:
• The shareholder’s right to access and review information is the norm, while restricting this right is an exception.
• The right to access information should be interpreted and applied broadly, while limitations on this right must be narrowly construed and confined to specific situations.
• Any potential harm to the company resulting from the shareholder’s access to information must be concrete and specific. Abstract or general risks should not be grounds for restricting the right to access information.
Managers restricting a shareholder’s right to information must provide concrete and substantiated reasons for doing so. Arbitrary restrictions on this right would undermine its essence and render the statutory protection meaningless.
Misuse of the right to information by the shareholder, such as making excessive or “harassing” requests, disrupting company operations through their demands, or seeking trade secrets and confidential information in a manner that poses a tangible risk of harm to the company, may justify restricting this right. Similarly, requests for confidential personal data relating to third parties within the company may also lead to justified restrictions.
The 11th Civil Chamber of the Court of Cassation, in its decision dated April 3, 2019 (Case No. 2018/201, Decision No. 2019/2620), found a request for company information and documents to be sent to an external address to be procedurally improper, stating:
“The court determined a justified reason for the removal of the manager due to the shareholder’s right to access and review information being violated. However, the relevant notary notice requesting the transfer of company information and documents to an address was deemed contrary to Article 614 of the TCC, which regulates the procedure for exercising this right.”
Even when there are justified reasons for restricting a shareholder’s right to access and review information, such restrictions must be proportionate and limited to what is necessary. For instance, if a shareholder requests information on five different matters and the manager has valid reasons to deny access to two of them, the manager’s refusal to provide information on the remaining three matters, where no justified reason exists, would be unlawful.
4. Legal Remedies If a Shareholder is Denied the Right to Information and Inspection
4.1) Authorities to Address Requests for Information and Inspection
A shareholder of a limited company who requests information or documents from the company’s manager and is denied or ignored may appeal to the general assembly of the limited company under Article 614/2 of the Turkish Commercial Code (TCC). The general assembly may decide to grant the shareholder access to the requested information and specify how this right is to be exercised.
If both the company manager and the general assembly obstruct the shareholder’s right to information and inspection, the shareholder may apply to the court under Article 614/3 of the TCC, requesting a judicial decision to enforce their rights.
The procedural path prescribed by law for a shareholder seeking to exercise the right to information and inspection is clear. The shareholder must:
1. Initially request information from the manager (TCC Article 614/1).
2. If the manager denies the request, the shareholder must appeal to the general assembly (TCC Article 614/2).
3. If the general assembly also denies the request, the shareholder may proceed to court (TCC Article 614/3).
If a shareholder bypasses this sequence—for example, by applying directly to the court without first making formal requests to the manager and the general assembly—the court is likely to reject the claim.
The Turkish Court of Cassation (11th Civil Chamber), in Decision No. 2015/8665 and Ruling No. 2016/3695 dated April 6, 2016, emphasized this:
“The court ruled in favor of the plaintiff based on the company’s alleged violation of the plaintiff’s right to information and inspection under Article 614 of the TCC.
However, under TCC Articles 614/(1) and (2), any shareholder may request information and inspect records from the managers. If the general assembly unjustly obstructs this right, the shareholder may seek a judicial decision. In this case, it is undisputed that the plaintiff had not followed these procedures. Hence, the decision to accept the claim solely based on the lack of response to the plaintiff’s notice to the company was incorrect and must be overturned in favor of the appellant.”
Judicial enforcement of the right to information and inspection can provide significant advantages to shareholders. For instance, a shareholder suspecting underpayment of dividends can clarify the matter by first using their right to information and inspection, potentially through the courts, before deciding whether to initiate legal proceedings (2).
Regarding whether a shareholder can challenge a general assembly’s decision denying their request for information and inspection by seeking its annulment:
• Theoretically, this is possible if the general assembly acted unfairly.
• However, pursuing annulment of the decision may be less effective since it does not directly ensure the exercise of the right to information and inspection. Additionally, Article 614 explicitly directs shareholders to the court for this matter, and requesting annulment may be dismissed due to a lack of legal benefit.
The Court of Cassation (11th Civil Chamber), in Decision No. 2013/17565 and Ruling No. 2014/10930 dated June 9, 2014, ruled similarly:
“Article 614/3 of the TCC stipulates that if the general assembly unjustly denies the right to information or inspection, the shareholder may apply to the court. In such cases, seeking annulment of the general assembly’s decision lacks legal benefit since the decision is a prerequisite for pursuing judicial enforcement. Thus, the court’s acceptance of the annulment claim was erroneous and must be overturned.”
4.2) Jurisdiction, Competent Court, and Mediation
Claims related to the right to information and inspection fall under the jurisdiction of commercial courts under Article 5 of the TCC. Where no commercial court exists, civil courts of first instance act in the capacity of commercial courts.
Under Article 14(2) of the Code of Civil Procedure, the court located in the jurisdiction of the company’s headquarters has exclusive jurisdiction over cases involving legal entities.
Thus, the competent court for cases concerning the right to information and inspection is the commercial court of first instance at the location of the company’s headquarters.
Article 5/A of the TCC mandates mediation for certain commercial disputes involving monetary claims. However, since cases concerning the right to information and inspection do not involve monetary claims, mediation is not a prerequisite for filing such claims.
4.3) Non-Compliance with Court Decisions
If the court orders the exercise of the right to information and inspection under Article 614, this decision is final, and enforcement proceedings can be initiated directly. The enforcement office acts as the “enforcement agent of the commercial court” in such cases.
Should the limited company resist providing the requested information or documents during the enforcement process, the enforcement office must ensure compliance using public authority. Complaints about enforcement actions can be directed to the commercial court overseeing the enforcement process.
The Court of Cassation (12th Civil Chamber), in Decision No. 2018/6618 and Ruling No. 2019/5756 dated April 8, 2019, highlighted:
“In cases where the commercial court orders the enforcement of the right to information and inspection, any complaints about enforcement actions must be reviewed by the court that issued the original decision.”
4.4) Right to Request Special Audit
If the information and inspection rights exercised with the company’s consent or through judicial decisions prove insufficient, the shareholder may request a special audit under Articles 635 and 438 of the TCC to clarify specific matters, such as dividend allocation.
Under Article 438:
• Any shareholder may request a special audit to clarify specific matters, provided the right to information and inspection has already been exercised.
• If the general assembly approves the request, the company or any shareholder may apply for the appointment of a special auditor within 30 days at the commercial court where the company is headquartered.
Subsequent articles in the TCC detail procedures to be followed if the general assembly rejects the request.
4.5) Right to Exit the Limited Company
If the shareholder’s protective rights, including the right to obtain information and inspect company documents, fail to yield results, and the general assembly of the limited company persistently and systematically refuses to provide information or documents in bad faith, the shareholder may exercise the right to exit the company if the conditions are met.
According to Article 638 of the Turkish Commercial Code (TCC), a shareholder may request the termination of their partnership with the company due to “justified reasons” by filing a lawsuit. The circumstances leading to the persistent denial of the right to obtain information and inspect company documents can constitute justified reasons, provided such behavior hinders the shareholder’s ability to protect their rights and fulfill their responsibilities effectively.
Relevant Judicial Decisions
The Supreme Court has clarified in various rulings that the systematic violation of shareholders’ rights, such as the denial of the right to information and inspection, can be regarded as a justified reason for exiting the company. For instance, the 11th Civil Chamber of the Supreme Court stated the following in its decision numbered 2017/6346 E., 2019/5043 K. dated 19.09.2019:
“The continuous and systematic denial of a shareholder’s fundamental rights, including their right to information and inspection, despite multiple attempts to exercise these rights through administrative and judicial channels, constitutes a justified reason for exiting the company. The refusal indicates a bad faith approach that undermines the partnership relationship.”
Process of Exiting the Company
A shareholder intending to exit the company must file a lawsuit in the competent commercial court, citing justified reasons. The plaintiff must substantiate claims with evidence demonstrating that their rights, particularly the right to obtain information and inspection, have been violated persistently and systematically.
Upon establishing the validity of the claims, the court may grant the shareholder the right to exit the company by either ordering the sale of their shares to other shareholders or liquidating the shareholder’s shares, depending on the company’s circumstances and structure.
Impact of Exit on Shareholder Rights
The shareholder who exits the company through this process may retain claims for damages if the violation of their rights caused financial or reputational harm. For instance, if the company withheld crucial information affecting the shareholder’s decision-making regarding dividends or investments, the exiting shareholder could seek compensation for the resulting damages.
5. Conclusion
The inability of a shareholder to obtain information or inspect documents related to the limited company they are a part of can often lead to unacceptable situations. Such a lack of access naturally hinders the shareholder’s ability to exercise many of their financial and managerial rights. In such cases, it is often beneficial for the shareholder to initially follow the procedure outlined in Article 614 of the Turkish Commercial Code (TCC) to exercise their right to information and document inspection. As explained above, ensuring that the processes stipulated in Article 614 are carried out in the correct order is crucial to establish the existence of legal benefit.
In cases where the shareholder’s demands for information remain unmet, they may also consider requesting a special audit, if necessary. Finally, if the conditions are met, shareholders who are denied their right to information and inspection may evaluate the possibility of exiting the limited company and requesting a severance payment.
(1) This article focuses on the “shareholder’s” right to information as regulated under Article 614 of the TCC. Although Article 644 of the TCC refers to Article 392, which governs the manager’s right to information, this issue is beyond the scope of this article.
(2) For a detailed discussion on the legal remedies available in cases where dividends are not distributed in limited companies, see our article Legal Remedies in Case of Non-Distribution of Dividends in a Limited Liability Company.
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